CVS Health's defining moves.
The defining strategic moves at CVS Health — each one explained and grounded in the record.
The Adjacency Expansion · Adjacency Expansion
CVS Bought Every Piece of the Healthcare Chain. Owning the Risk Is the Part It Can't Price.
CVS spent ~$78B on Aetna and $10.6B on Oak Street to stop being a pharmacy and start being healthcare itself. The design is elegant. But its Aetna Medicare loss ratio hit 90.4% in Q1 2024, and the insurance arm lost $439M in a single quarter.
8 min
The Cross-Subsidy · Business Model
CVS Looks Like a Drugstore. The Profit Lives in a PBM You've Never Walked Into.
Everyone calls CVS a pharmacy chain. By 2023 its Caremark-led Health Services segment booked $186.8B of $357.8B in revenue and held its profit near $7.2B in 2024 even as the top line shrank 7.1%. The engine that holds CVS up is also the one the FTC is now trying to take apart.
8 min
The Cannibalization Choice · Decision Forks
CVS Quit Cigarettes. The $2 Billion Headline Hid the Real Trade.
In 2014 CVS walked away from ~$2B in tobacco revenue and called it the right thing to do. The number is real but misleading: ~$1.5B was direct sales, ~$500M was basket — and the company said it didn't touch 2014 EPS. The sacrifice was the point.
7 min
The Fall · Decision Forks
Everyone Blames the Opioid Settlement. CVS Decided to Close the Stores a Year Earlier.
CVS's board authorized closing ~900 stores on November 17, 2021—nearly a full year before the $5B opioid settlement. The real culprit is a margin that fell from 9.9% to 4.6% in eight years. The settlement was a convenient story.
7 min